Winnipeg Free Press - PRINT EDITION

Protectionism a dead weight on economy

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Saskatchewan Premier Brad Wall drew a bead on Ontario's penchant for giving domestic companies preference when contracting for public works or in other government procurement bids. Mr. Wall called upon the premiers at their annual conference, in Charlottetown last week, to tear down the barriers to interprovincial trade in a country increasingly interested in opening its borders to the global flow of commodities and services.

The Agreement on Internal Trade, signed 19 years ago, was supposed to eliminate barriers. Today, the premiers are calling its bluff -- there is no good enforcement of its fine principles and that means, for example, provincial monopolies and regulations can frustrate the free flow of wine across borders despite the fact the federal government has legislated an open-door rule.

Ontario has made it clear it is standing pat on its local-knowledge clause that awards additional points to companies in that province when bids come in on tendered work. Premier Kathleen Wynne has said this is good public policy in a province still struggling for an economic boost; keeping money circulating within local communities has the trickle-down effect of supporting jobs and spreading wealth.

Of course, this is the antithesis of free trade, an economic compact that boosts a country's gross domestic product, improves competition and underpins the rights of mobility of citizens. Canadians don't have to carry papers to cross borders, but if your journeyman's licence doesn't certify you to do electrical work in a neighbouring province, your options to exploit shifting job markets are limited.

Constitutionally, tariffs and duties are verboten in Canada. But provinces have historically frustrated free trade through the use of regulatory regimes that impose on the various sectors rules for the importation of goods, transportation of commodities and hiring of trades and professions.

Just try, the transportation sector says, to drive a semi-trailer from Vancouver to Halifax. Despite vowing to harmonize requirements on weights and measures, the provinces still have not fully come to standardize their rules. Further, even where they have, jurisdictions are still hanging tight to different rules for the number of hours a trucker can be behind the wheel.

Canada has forged effective free-trade agreements across the globe and has seen its economy grow as a result. Yet, provinces continue to work in protectionist ways. The smart bet is premiers will be arguing for another 20 years about uneven standards of trade and policies that unapologetically give local procurement a leg up.

Manitoba's economy is too dependent on moving its goods -- food, manufactured products and natural resources -- across borders to stay silent or hope for goodwill to prevail. The Selinger government, however, has refused to see the benefit of joining the New West Partnership, the trade pact signed by the three other western governments that has seen B.C., Alberta and Saskatchewan standardizing rules of trade, removing barriers to movement of goods and opening their unified market to global buyers. A one-stop corporate registration process is very attractive to foreign corporations looking for a toe-hold in the Canadian market.

Not everyone's happy. Under the New West, Saskatchewan awards public work contracts to the lowest bid and heavy-construction firms there must now compete with Alberta companies that don't have a PST eroding the profit margin.

But Mr. Wall's grievance is solid and unassailably principled in a country that is pursuing open borders around the globe. Premier Greg Selinger should stand shoulder-to-shoulder with him and he can promote liberalized trade by joining the New West's campaign to pull Canada firmly out of archaic protectionism.

Editorials are the consensus view of the Winnipeg Free Press’ editorial board, comprising Catherine Mitchell, David O’Brien, Shannon Sampert, and Paul Samyn.

Republished from the Winnipeg Free Press print edition September 2, 2014 A12

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